Spotlight On: Charles Foschini, Senior Managing Director, Berkadia

Spotlight On: Charles Foschini, Senior Managing Director, Berkadia

2023-01-05T12:43:23-05:00January 5th, 2023|Commercial Real Estate, Miami, Spotlight On|

2 min read January 2023 Invest: spoke with Charles Foschini, senior managing director at commercial real estate firm Berkadia, about the firm’s method for success in a booming South Florida real estate market. “I always tell people we make money on deals we turn down because it frees us up to do the transactions we can close,” he said. 

What is your assessment of real estate in South Florida?

In Florida, we continue to have exceptional and market leading statistics in terms of in-migration, employment and demand for commercial real estate assets across the board, including multifamily, industrial, retail and office. I anticipate that trend continuing due to numerous corporate relocations to our area, the depth of talent moving here and the general demand for real estate product in South Florida. That said, the capital markets have been volatile all year and it has affected real estate in every part of the world. The rise in interest rates has been rapid, making it hard for buyers or borrowers to pick the appropriate time to commit to a loan and lock into a rate. This volatility has driven many lenders to the sidelines this year, making assignments significantly more challenging.  

What do clients look for when they’re working with Berkadia?

Clients come to Berkadia because we are the largest privately held commercial real estate bank. We are  finance- and solution-focused and have a long-term view as part of our joint ownership by Berkshire Hathaway and Jefferies Financial Group. Clients come to us for exceptional access to capital that is uniquely ours, due to our long-standing relationships with Freddie Mac, Fannie Mae, FHA, life company correspondent lenders and bridge capital. Clients  come to us for advisory services and expertise running a full process throughout the capital markets to find the best lender, whether that is our own capital, or a lender we represent.

What is your criteria when analyzing potential transactions?

I always tell people that we make money on deals we turn down because it frees us up to do the transactions that we feel confident that we can close. First and foremost, we look at the quality of the asset – whether it has good fundamentals and location – as well as strong ownership and sponsorship. Then, we consider whether the lending sources will be competitive for this project. The same is true for the acquisition of land for development. How strong the developer is, how experienced they are and if they can get the building constructed pro forma are critical for a lender, both for a construction loan and mezzanine and equity. The project must be profitable and exciting enough for a permanent loan or to sell for a return. All of those are part of our analysis. 

In which sectors have you seen the most activity?

If you look at it by asset class, office buildings that tend to offer an environment and experience, not solely just a place to house workers, have created their own demand in this post-pandemic environment. This has made for unprecedented lease rates in Brickell, Wynwood, South Beach, Aventura and Palm Beach County. The tri-county area has found its own footing. Multifamily rent growth, which has been exponential in recent years, is finally starting to flatten but is still supportable in many markets and properties, and demand remains very strong. For industrial, super-quality modern logistics and industrial space is still seeing strong demand in South Florida, although supply is limited. While retail is still in flux, experiential retail specifically has bounced back. South Florida also has the benefit of a lot of hotels that are destination-, vacation- and resort-oriented as opposed to just business and conference hotels, especially in the Keys and Miami Beach, where there is unprecedented demand. 

How is Berkadia able to hire and retain great talent in this tight labor market?

Berkadia has a highly collaborative environment, with a great work and people ethic from the top down. Most people who have the opportunity to work with Berkadia are excited and see things differently. We’re private, which gives us the ability to take a very long-term approach to the business. Publicly traded companies exist for shareholders concerned about the next 90 days. That’s not how we operate here, and the benefits that come with that are felt from top to bottom.

What are the biggest challenges facing the Miami real estate market?

The biggest challenge would be a slowdown in the market that is caused by the recession or continued interest rate volatility, which significantly slows the pace of transactions. Overall, my outlook for the near term is exceptionally positive. South Florida has had several consecutive strong years despite the pandemic – or even perhaps because of it. Looking ahead, I believe the growth we’re seeing in South Florida’s economy will, in the best case, counteract or mitigate any short-term effects of a recession or continued volatility we see. 

For more information, visit: 

https://www.berkadia.com/ 

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